Verizon, MetroPCS Tell Court: FCC Net-Neutrality Rules Are Illegal

7/09/2012 12:01 AM Eastern

By: John Eggerton

Washington —Telcos Verizon Communications and
MetroPCS last week teed up three key questions in their
court challenge of the Federal Communications Commission’s
network-neutrality rules, and then immediately
answered them.

The questions: (1) whether the FCC exceeded its authority
in a December 2010 order codifying its networkopenness
guidelines with common-carrier regulations;
(2) whether the order was unconstitutional; and (3)
whether it was arbitrary and capricious.

Their answers: (1) Yes; (2) yes; and (3) yes.

The brief delved into the FCC’s second attempt to “conjure
a role for itself” in regulating the Internet. The reference
is to the Comcast v. BitTorrent decision, in which the
same court threw out the agency’s discrimination finding
against Comcast based on the court’s finding that the
FCC had exceeded its authority.

The decision prompted the FCC to codify its guidelines
in the rules, which went into effect last fall. Attorney
Helgi Walker of Wiley Rein is representing Verizon in
the current challenge; Walker was the Comcast attorney
who argued and won the Bittorrent case for the nation’s
largest cable operator.

The National Cable & Telecommunications Association
— of which Comcast is the largest member — is sitting out
this challenge, having been at the table when the compromise
net-neutrality order was hammered out.

Cable operators may not be arguing against the rules in
court, but their support of the rules was grudging at best,
and they will be following the case closely. In the brief,
Walker said the rules had been a case of the FCC setting
price controls for access by making that price “zero” with
its nondiscrimination mandate.

National Cable & Telecommunications Association
president Michael Powell has said the FCC’s netneutrality
rules “in essence made it illegal to have a
two-sided market” because it prevented operators from
charging a Google or Netflix or anyone else in the “value
chain” for the cost of the network — essentially that
“zero” Walker talked about in the brief.

Following is a summary of the Verizon/MetroPCS
case against the FCC’s rules:

(1) They conflict with the Communications Act, which
expressly forbids the FCC from applying common-carrier
regulations to ISP service.

(3) The FCC’s order violates the First and Fifth
Amendments: Broadband is the modern platform for
speech, and the FCC has not justified its regulation of
that First Amendment platform. It is also a violation of
the Fifth Amendment protection from government taking
property without compensation.

(4) The order is arbitrary and capricious. The FCC does
not justify deterring network investment or apply the
rules to others in the Internet economy that could act as
gatekeepers.

The briefs in the case will continue into November, according
to the agreed-on schedule. The FCC is not scheduled
to weigh in with its defense of the rules until Sept. 10.
But the casewill not be a reprise of Walker v. FCC General
Counsel Austin Schlick, the combatants in Comcast v.
BitTorrent case. Schlick announced last month he was
leaving the commission.